EXHIBIT 99
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CAUTIONARY STATEMENT
Medi-Ject Corporation (the "Company"), or persons acting on behalf of the
Company, or outside reviewers retained by the Company making statements on
behalf of the Company, from time to time, may make, in writing or orally,
"forward-looking statements" as defined under the Private Securities Litigation
Reform Act of 1995 (the "Act"). This Cautionary Statement is for the purpose of
qualifying for the "safe harbor" provisions of the Act and is intended to be a
readily available written document that contains factors which could cause
results to differ materially from those projected in such forward-looking
statements. These factors are in addition to any other cautionary statements,
written or oral, which may be made or referred to in connection with any such
forward-looking statement.
The following matters, among others, may have a materials adverse effect on
the business, financial condition, liquidity, results of operations or
prospects, financial or otherwise, of the Company. Reference to this
Cautionary Statement in the context of a forward-looking statement shall be
deemed to be a statement that any one or more of the following factors may cause
actual results to differ materially from those which might be projected ,
forecast, estimated or budgeted by the Company in such forward-looking statement
or statements:
UNCERTAINTY OF MARKET ACCEPTANCE; LIMITED CURRENT MARKET FOR NEEDLE-FREE
INJECTION SYSTEMS
The Company's success will depend upon increasing market acceptance of its
needle-free injection systems as an alternative to needle injections. During the
approximately 15 years since their initial commercial introduction, the
Company's needle-free injection systems have had only limited success competing
with traditional needles and syringes because, the Company believes, of the
size, cost and complexity of use and maintenance of the Company's injectors and
the relatively small number of parenteral drugs that have been self-
administered. In order to increase market acceptance, the Company believes that
it must successfully develop improvements in the design and functionality of
future needle-free injection systems that will reduce their cost and increase
their appeal to users, thereby making these systems desirable despite their
premium cost over traditional disposable needles and syringes. Projected
improvements in functionality and design may not adequately address the actual
or perceived complexity of using the Company's needle-free injection systems or
adequately reduce their cost. In addition, the Company believes that its future
success is dependent upon its ability to enter into additional collaborative
agreements with drug and medical device manufacturers for the use of its needle-
free injection systems with new and existing parenteral drugs. There can be no
assurance that the Company will be successful in these efforts or that its
needle-free injection systems will ever gain sufficient market acceptance to
sustain profitable operations.
HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY
The Company has had a history of operating losses and, at December 31, 1996,
had an accumulated shareholders' deficit of approximately $11,540,467. Net
losses for the years ended December 31, 1994, 1995 and 1996 were $1,066,462,
$1,882,459 and $2,213,563 respectively. The Company expects to continue to incur
net losses at least through 1997, as it introduces new and improved needle-free
injection systems while undertaking research and development, regulatory
approval and commercial introduction activities related to new uses for its
needle-free injection systems. There can be no assurance that the Company will
achieve or sustain profitability in the future.
RISKS ASSOCIATED WITH DEVELOPING NEW PRODUCTS
The Company believes that its future success is in part dependent upon the
development and commercial introduction of needle-free injection systems that
incorporate improvements in design and functionality to reduce their cost and
increase their appeal to users. In the United States, Japan and certain European
countries, the Company's needle-free Medi-Jector system has been approved only
for the injection of insulin and human growth hormone. The Company's future
success depends to a significant degree on its ability to obtain regulatory
approval for and commercialize the use of its needle-free injection systems for
other parenteral drugs. However, the Company has not yet completed research and
development work or obtained regulatory approval for such improved systems or
for use with any drugs other than insulin and human growth hormone. There can be
no assurance that any development work will ultimately be successful or that
unforeseen difficulties will not occur in research and
development, clinical testing, regulatory submissions and approval, product
manufacturing and commercial scale up, marketing, or product distribution
related to any such improved systems or new uses. Any such occurrence could
materially delay the commercialization of such improved systems or new uses or
prevent their market introduction entirely.
RISKS OF RELATIONSHIP WITH BECTON DICKINSON AND COMPANY
The Company's ability to introduce improved and less expensive needle-free
injection systems will depend in part on the success of its collaborative effort
with Becton Dickinson to develop a smaller needle-free injector with a
disposable, single-use front-end chamber. This effort is governed by the terms
of a Development and License Agreement between the Company and Becton Dickinson
(the "Becton Dickinson Agreement"), under which the Company is responsible for
developing the injector body and Becton Dickinson is responsible for developing
the front-end chamber for the system. Until January 1, 1999, Becton Dickinson
may terminate the Becton Dickinson Agreement without cause by providing six
months' written notice and after January 1, 1999, by providing 12 months'
written notice. Since the Company expects that the majority of the funding for
its development efforts on the new, smaller injector will be derived from
payments to be made by Becton Dickinson under the Becton Dickinson Agreement and
since responsibility for developing the front-end chamber lies with Becton
Dickinson, any termination of the Becton Dickinson Agreement would adversely
affect the timing and the likelihood of ultimate success of these development
efforts. In addition, under the Becton Dickinson Agreement, Medi-Ject granted
Becton Dickinson the exclusive, worldwide right to sell a proposed new injector
for use with insulin and any other injector that is not designed or calibrated
for use with a specific drug made by a specific drug company and that is
intended to be distributed primarily through pharmacies for non-professional
use. Prior to developing a system for use with any specific drug, the Company
and Becton Dickinson must mutually agree on whether or not such system will be
of the type covered by Becton Dickinson's exclusive sales rights.
DEPENDENCE ON COLLABORATIVE RELATIONSHIPS
The Company believes that the introduction and broad acceptance of its systems
is in part dependent upon the success of its current and any future development
and licensing arrangements with pharmaceutical and medical device companies
covering the development, manufacture or use of the Medi-Jector system with
specific parenteral drug therapies. The Company anticipates, consistent with
past practice, that under these arrangements the pharmaceutical or medical
device company will assist in the development of systems for such drug therapies
and collect or sponsor the collection of the appropriate data for submission for
regulatory approval of the use of the Medi-Jector system with the licensed drug
therapy. The pharmaceutical or medical device company also will be responsible
for distribution and marketing of the systems for these drug therapies either
worldwide or in specific territories. The Company currently is a party to seven
such agreements. There can be no assurance that the Company will be successful
in executing additional agreements with pharmaceutical or medical device
companies or that existing or future agreements will result in the sale of the
Company's needle-free injection systems. As a result of these arrangements, the
Company is dependent upon the development, data collection and marketing efforts
of such pharmaceutical and medical device companies. The amount and timing of
resources such pharmaceutical and medical device companies devote to these
efforts are not within the control of the Company, and such pharmaceutical and
medical device companies could make material decisions regarding these efforts
that could adversely affect the Company's future financial condition and results
of operations. In addition, factors that adversely impact the introduction and
level of sales of any drug covered by such licensing arrangements, including
competition within the pharmaceutical and medical device industries, the timing
of FDA or other approvals and intellectual property litigation (such as that
surrounding Bio-Technology General Corporation's human growth hormone, which has
delayed the introduction of the use of the Medi-Jector system with human growth
hormone in the United States), will also negatively affect the Company's sales
of Medi-Jector systems for those uses.
LIMITED MANUFACTURING EXPERIENCE; RISKS ASSOCIATED WITH NEW MATERIALS, NEW
ASSEMBLY PROCEDURES AND INCREASED PRODUCTION LEVELS
The Company's past assembly, testing and manufacturing experience has related
primarily to the assembly of products from machined stainless steel and
composite components in limited quantities. The Company's planned future needle-
free injection systems necessitate significant changes and additions to the
Company's manufacturing and assembly process to accommodate new plastic
components and a new injection power source. These systems must be manufactured
in compliance with regulatory requirements, in a timely manner and in sufficient
quantities while maintaining quality and acceptable manufacturing costs. In
addition, the Company's plans call for significantly increased levels of
production and a shift to performing more manufacturing functions internally
rather than relying on third-party suppliers, which will require the Company to
expand beyond its current facilities. In the course of these changes and
additions to its manufacturing and production methods, the Company may encounter
difficulties, including problems involving yields, quality control and
assurance, product reliability, manufacturing costs, existing and new equipment,
component supplies and shortages of personnel, any of which could result in
significant delays in production. There can be no assurance that the Company
will be able to produce and manufacture successfully the Company's future
needle-free injection systems. Any failure to do so would negatively impact the
Company's business, financial condition and results of operations
DEPENDENCE ON THIRD-PARTY DEVELOPMENT EFFORTS
The Company relies heavily on outside consultants for its technology
development and engineering work, and the Company's ability to introduce new
systems and improvements to its existing systems is dependent on their efforts.
There can be no assurance that the Company's current consultants will produce
the necessary work product in a timely fashion or at all, or that the Company
could find suitable replacements if the services of such consultants were to
become unavailable.
COMPETITION; RISK OF TECHNOLOGICAL OBSOLESCENCE
The Company's current competition is primarily from traditional hypodermic
needles and syringes which are used for the vast majority of injections
administered today. In order to make needles and syringes easier and safer to
use, certain companies have developed syringes with hidden needles, spring-
powered needle injectors and injectors with sheathed needles. In addition to
competing with these types of traditional hypodermic needles and syringes, the
Company's needle-free injection systems also compete with other needle-free
injection devices. Currently, competition in the needle-free injection market is
limited to small companies with modest financial and other resources, but the
barriers to entry are currently low and additional competitors may enter the
needle-free injection systems market, including companies with substantially
greater resources and experience than the Company. There can be no assurance
that the Company will be able to compete effectively against its current or
potential competitors in the needle-free injection market, or that such
competitors will not succeed in developing or marketing products that will be
more accepted in such market. Competition in this market could also force the
Company to reduce the prices of its systems below currently planned levels,
thereby adversely affecting the Company's revenues and future profitability.
In general, injection is used only with drugs for which other drug delivery
methods are not possible, in particular with biopharmaceutical proteins (drugs
derived from living organisms, such as insulin and human growth hormone) that
cannot currently be delivered orally, transdermally (through the skin) or
pulmonarily (through the lungs). Many companies, both large and small (including
Becton Dickinson), are engaged in research and development efforts on novel
techniques aimed at delivering such drugs without injection. The successful
development and commercial introduction of such a non-injection technique would
likely have a material adverse effect on the Company's business, financial
condition, results of operations and general prospects.
NEED TO COMPLY WITH GOVERNMENT REGULATIONS
Government regulation in the United States and certain foreign countries is a
significant factor in the Company's business. In the United States, the Food and
Drug Administration (the "FDA") has principal jurisdiction over products that
are used for human injection. Certain clearances are required from the FDA
before medical devices, such as the Company's needle-free injection systems and
their use with new drug therapies, can be marketed. The FDA regulatory process
in the United States may delay the marketing of new systems for lengthy periods
and impose substantial additional costs. Moreover, FDA marketing clearance
regulations depend heavily on administrative interpretation, and there can be no
assurance that interpretations made by the FDA or other regulatory bodies, with
possible retroactive effect, will not adversely affect the Company. There can be
no assurance that the Company will be able to obtain clearance of any future
Company systems or any expanded uses of current or future Company systems in a
timely manner or at all. In addition, even if obtained, FDA clearances are
subject to continual review, and if the FDA believes that the Company is not in
compliance with applicable requirements, it can institute proceedings to detain
or seize the Company's systems, require a recall, suspend production,
distribution, marketing and sales, enjoin future violations and assess civil and
criminal penalties against the Company, its directors, officers or employees.
The FDA may also suspend or withdraw market approval for the Company's systems
or require the Company to repair, replace or refund the cost of any system
manufactured or distributed by the Company. The Company must also demonstrate
compliance with current Good Manufacturing Practices ("GMP") regarding quality
control and manufacturing procedures. Compliance with these requirements
requires the Company to expend time, resources and effort in the areas of
production and quality control for itself and for its contract manufacturers. If
violations of the applicable regulations are noted during FDA inspections, the
continued marketing of any systems manufactured by the Company may be halted or
adversely affected.
Sales of medical devices outside the United States are subject to United
States export requirements and foreign regulatory requirements. Legal
restrictions on the sale of imported medical devices vary from country to
country. The time and requirements to obtain approval by a foreign country may
differ substantially from those required for FDA approval. There can be no
assurance that the Company will be able to obtain regulatory approvals or
clearances for its products in foreign countries.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company anticipates that its with cash on hand, interest expected to be
earned thereon and anticipated revenues will be sufficient to finance the
Company's operations at least through 1997, although there can be no assurance
that additional capital will not be required sooner. In order to meet its needs
beyond this period, the Company may be required to raise additional funds
through public or private financings. Such financings may not be available when
needed on terms acceptable to the Company or at all. Moreover, any additional
equity financings may be dilutive to purchasers in this offering, and any debt
financing may involve restrictive covenants. An inability to raise such funds
when needed might require the Company to delay, scale back or eliminate some or
all of its planned system enhancements, market expansion and research and
development activities, and might require the Company to cease operations
entirely.
DEPENDENCE ON PROPRIETARY TECHNOLOGY RIGHTS
The Company's success will depend in part on its ability to protect its
proprietary rights and to operate without infringing on the proprietary rights
of third parties. In appropriate circumstances, the Company may apply for patent
protection for uses, processes, products and systems that it develops. The
Company currently owns two United States patents and one United States design
patent and has filed eight United States patent applications, one of which has
been recently allowed, one Taiwanese patent application and one Patent
Cooperation Treaty application. There can be no assurance that any of the
Company's current or future patent applications will result in issued patents,
that the scope of any current or future patents will prevent competitors from
introducing competitive products or that any of the Company's current or future
patents would be held valid or enforceable if challenged. Patenting medical
devices involves complex legal and factual questions and there is no consistent
policy regarding the breadth of claims which issue pertaining to such
technologies; the ultimate scope and validity of patents issued to the Company
or to its competitors are thus unknown. In addition, there can be no assurance
that measures taken by the Company to protect its unpatented proprietary rights
will be sufficient to protect these rights against third parties. Likewise,
there can be no assurance that others will not independently develop or
otherwise acquire unpatented technologies or products similar or superior to
those of the Company.
There has been substantial litigation regarding patent and other intellectual
property rights in the medical device industry and the Company may in the future
be required to defend its intellectual property rights against infringement,
duplication and discovery by third parties or to defend itself against third-
party claims of infringement. Likewise, disputes may arise in the future with
respect to ownership of technology developed by consultants or under research or
development agreements with pharmaceutical companies, or with respect to the
ownership of technology developed by employees who were previously employed by
other companies. Any such disputes or related litigation could result in
substantial costs to, and a diversion of effort by, the Company. An adverse
determination could subject the Company to significant liabilities to third
parties, require the Company to seek licenses from or pay royalties to third
parties or require the Company to develop appropriate alternative technology.
There can be no assurance that any such licenses would be available on
acceptable terms or at all, or that the Company could develop alternate
technology at an acceptable price or at all. Any of these events could have a
material adverse effect on the Company's business, financial condition and
results of operations.
RISKS ASSOCIATED WITH THIRD-PARTY REIMBURSEMENT OF END USERS
Sales of the Company's current and proposed systems in certain markets are
dependent in part on the availability of adequate reimbursement from third-party
healthcare payors. Currently, insurance companies and other third-party payors
reimburse the cost of needle-free injectors on a case-by-case basis and may
refuse reimbursement if they do not perceive benefits to their use in a
particular case. Third-party payors are increasingly challenging the pricing of
medical products and services, and there can be no assurance that such third-
party payors will not in the future increasingly reject claims for coverage of
the cost of needle-free injections. In addition, there can be no assurance that
adequate levels of reimbursement will be available to enable the Company to
achieve or maintain market acceptance of its systems or maintain price levels
sufficient to realize profitable operations. Furthermore, there is a possibility
of increased government control or influence over a broad range of healthcare
expenditures in the future. Any such trend could negatively impact the market
for the Company's needle-free injection systems.
DEPENDENCE ON SINGLE SOURCE SUPPLIERS
The systems currently sold by the Company contain a number of customized steel
components manufactured by third-party suppliers, and the most recently
introduced model Medi-Jector system contains certain plastic components the
molds for which are located at the facilities of the Company's plastics
suppliers. In addition, certain of the Company's planned systems will contain
plastic disposable front-end chambers which Becton Dickinson has the exclusive
right to manufacture for the Company under the Becton Dickinson Agreement.
Regulatory requirements applicable to medical device manufacturing can make
substitution of suppliers costly and time-consuming. In the event that the
Company could not obtain adequate quantities of these components from its
suppliers, there can be no assurance that the Company would be able to access
alternative sources of such components within a reasonable period of time, on
acceptable terms or at all. In particular, if the Company were required to
change suppliers for its current plastic components, it would need either to
move the necessary molds or to obtain new molds, either of which would entail
significant delay. Similarly, if Becton Dickinson declined to supply the Company
with disposable front-end chambers for its proposed systems, while the Company
has the right to obtain a license to use Becton Dickinson's technology, it is
unlikely that the Company could manufacture such components as inexpensively as
Becton Dickinson. The unavailability of adequate quantities, the inability to
develop alternative sources, a reduction or interruption in supply or a
significant increase in the price of components could have a material adverse
effect on the Company's ability to manufacture and market its products.
RISK OF PRODUCT LIABILITY; LIMITATIONS OF INSURANCE COVERAGE
The Company faces an inherent business risk of exposure to product liability
claims in the event that an end user is adversely affected by use or misuse of
its systems, and the Company has in the past experienced such claims. The
Company currently carries a product liability insurance policy with an aggregate
limit of $5,000,000. As the result either of adverse claim experience or of
medical device or insurance industry trends, however, the Company may in the
future have difficulty in obtaining product liability insurance or be forced to
pay very high premiums, and there can be no assurance that insurance coverage
will continue to be available on commercially reasonable terms or at all. In
addition, there can be no assurance that insurance will adequately cover any
product liability claim against the Company. A successful product liability or
other claim with respect to uninsured liabilities or in excess of insured
liabilities could have a material adverse effect on the Company's business,
financial condition and operations.
QUARTERLY FLUCTUATIONS IN OPERATING RESULTS
The Company's operating results may vary significantly from quarter to
quarter, in part because of changes in consumer buying patterns, aggressive
competition, the timing of the recognition of licensing or development fee
payments and the timing of, and costs related to, any future system or new drug
use introductions. The Company's operating results for any particular quarter
are not necessarily indicative of any future results. The uncertainties
associated with the introduction of any new system or drug use and with general
market trends may limit management's ability to forecast short-term results of
operations accurately. Fluctuations caused by variations in quarterly operating
results or the Company's failure to meet analysts' projections or public
expectations as to results may adversely affect the market price of the
Company's Common Stock.
POSSIBLE STOCK PRICE VOLATILITY
The trading prices of the Company's Common Stock could be subject to wide
fluctuations in response to events or factors, many of which are beyond the
Company's control. These could include, without limitation (i) quarter to
quarter variations in the Company's operating results, (ii) announcements by the
Company or its competitors regarding the results of regulatory approval filings,
clinical trials or testing, (iii) developments or disputes concerning
proprietary rights, (iv) technological innovations or new commercial products,
(v) material changes in the Company's collaborative arrangements and (vi)
general conditions in the medical technology industry. Moreover, the stock
market has experienced extreme price and volume fluctuations, which have
particularly affected the market prices of many medical technology and device
companies and which have often been unrelated to the operating performance of
such companies.
RELIANCE ON KEY PERSONNEL
The success of the Company is highly dependent, in part, on its ability to
attract and retain highly qualified personnel, including senior management and
scientific personnel. Competition for such personnel is intense, and there can
be no assurance that the Company will be successful in attracting and retaining
key personnel in the future. Any failure to do so could adversely affect the
Company.